Canadian dollar in a tight range ahead of BOC interest rate decision
The US dollar was little changed during the American session as traders reacted to the latest US trade numbers. According to the Commerce Department, the country’s exports rose from $202 billion in March to $204 billion in May. At the same time, imports declined from more than $277 billion to $273 billion. This led the trade deficit to narrow from more than $75 billion to $68 billion, better than the expected $69 billion. Focus now shifts to the inflation numbers that will come out on Thursday. Analysts expect the data to show that consumer prices rose by more than 4% in May.
The Canadian dollar was little changed in the overnight session ahead of the important Bank of Canada (BOC) interest rate decision. The bank is expected to leave its interest rate unchanged at 0.25%. It will also keep its current asset purchases program intact since it already tapered them in the previous meeting. The meeting comes a few days after Canada published weak job numbers as the impact of the lockdowns continued. Also, it comes a day after Canada released the relatively weak trade numbers. The country’s exports declined from more than C$50.7 billion in March to C$50.21 billion while imports fell from $52 billion to $49.61 billion.
The price of crude oil retreated slightly after relatively weak US inventories data. According to the American Petroleum Institute (API), the total number of inventories declined by more than 2.1 million barrels after falling by 5.36 million barrels in the previous week. This drawdown was smaller than the expected 3.56 million. Later today, oil prices will react to the latest data by the Energy Information Administration (EIA).
The EURUSD pair was little changed during the Asian session. It is trading at 1.2183, which is slightly below the upper side of the descending channel on the three-hour chart. The pair is also trading at the same level as the 25-day moving average. Also, it seems to be forming a descending head and shoulders pattern, which is usually a bearish sign while the Relative Strength Index (RSI) has risen to the neutral level of 54. Therefore, the pair may resume falling, with the next target being at 1.2100, which is at the lower side of the channel.
The ETHUSD pair was little changed after it dropped sharply yesterday. It is trading at 2,466, which is slightly above yesterday’s low of 2,300. On the four-hour chart, it is below the lower line of the bearish pennant pattern while the Relative Strength Index (RSI) has moved close to the oversold level. The pair will likely resume the downward trend as sentiment in the market wanes.
The AUDNZD rose slightly after the latest China inflation data. On the four-hour chart, the pair has formed an inverted head and shoulders pattern, which is usually a bullish signal. It has also moved between the important support and resistance levels at 1.0692 and 1.0800. Also, it is slightly above the 25-day and 15-day moving averages while the signal and histogram of the MACD are above the neutral level. Therefore, the pair may keep rising as bulls target the resistance at 1.0800.